As of yesterday, we have filed 950 tax returns and I can count the number of clients that fared worse than the previous year on both hands.
Those 10 fingers represent people who fall into 3 categories.
Gregory J. Cook, EA, CPA
Accredited Tax Advisor
Those who did not benefit from the increased Standard Deduction and loss of Personal Exemptions
Single taxpayers who routinely had Itemized Deductions of $12,000 to $16,000. In 2017 they had the benefit of those deductions plus their Personal Exemption of $4,050. Under the new law, they gained nothing from the Standard Deduction being increased from $6,350 to $12,000, and lost the $4,050 Personal Exemption deduction. Most however, realized benefits in other areas of the code, like the reduction in Tax Brackets.
The same holds true for married couples who routinely had $24,000 to $36,000 of Itemized Deductions. They gained nothing from the Standard Deduction increase from $12,700 to $24,000. Yet they lost their Personal Exemption deductions of $8,100. Again, most however, realized benefits in other areas of the code, like the reduction in Tax Brackets.
Those people that routinely deducted Employee Business Expenses
In my opinion this was the most unfair part of the new tax code. Supporters will argue that the higher Standard Deduction will off-set the loss of the deductions. To that I say, sometimes, but not always.
Those that routinely deducted more than $10,000 in State and Local Taxes (SALT)
If you fall into this category, you are most likely a high income person and should realize benefits in other areas of the code, like the reduction in Tax Brackets.
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